CMS pre­scribes pay­ment fix to re­sus­ci­tate US an­tibi­ot­ic in­dus­try

As the UK ex­per­i­ments with a sub­scrip­tion-style pay­ment sys­tem to re­sus­ci­tate the fledg­ling an­tibi­ot­ic in­dus­try — in the Unit­ed States, the Cen­ters for Medicare & Med­ic­aid Ser­vices (CMS) is work­ing on re­struc­tur­ing the pay­ment ap­pa­ra­tus for new an­tibi­otics to re­vi­tal­ize an­timi­cro­bial de­vel­op­ment and res­cue ex­ist­ing man­u­fac­tur­ers.

For one of the biggest threats to glob­al health, the li­on’s share of an­tibi­ot­ic de­vel­op­ment is tak­ing place in a hand­ful of labs of small bio­phar­ma com­pa­nies as a ma­jor­i­ty of their larg­er coun­ter­parts fo­cus on more lu­cra­tive en­deav­ors. In re­cent months, a hand­ful of an­tibi­ot­ic de­vel­op­ers — in­clud­ing Achao­gen and Tetraphase — have seen their val­ue go up in smoke as fee­ble sales frus­trate growth.

It is no se­cret that the in­dus­try play­ers con­tribut­ing to the ar­se­nal of an­timi­cro­bials are fast dwin­dling. Drug­mak­ers are en­ticed by green­er pas­tures, com­pared to the long, ar­du­ous and ex­pen­sive path to an­tibi­ot­ic ap­proval that of­fers lit­tle fi­nan­cial gain as treat­ments must be priced cheap­ly, and of­ten lose po­ten­cy over time as mi­crobes grow re­sis­tant to them. Con­se­quent­ly, there have been no new class of an­tibi­otics ap­proved since the 1980s — and to­day, rough­ly 700,000 deaths an­nu­al­ly are at­trib­uted to drug-re­sis­tant bac­te­ria, ac­cord­ing to the WHO.

Medicare ben­e­fi­cia­ries ac­count for the ma­jor­i­ty of both new an­timi­cro­bial re­sis­tance (AMR) cas­es and fa­tal­i­ties in the Unit­ed States, CMS ad­min­is­tra­tor Seema Ver­ma not­ed in the jour­nal Health Af­fairs on Fri­day.

In the Unit­ed States, in­cen­tives are al­ready in place to push drug­mak­ers to de­vel­op an­tibi­otics, such as fund­ing sup­port through the Bio­med­ical Ad­vanced Re­search and De­vel­op­ment Au­thor­i­ty (BAR­DA) and reg­u­la­to­ry re­forms such as the Lim­it­ed Pop­u­la­tion Path­way for An­tibac­te­r­i­al and An­ti­fun­gal Drugs (LPAD)  — but the in­dus­try is clam­or­ing for the pas­sage of “pull in­cen­tives,” or pol­i­cy mea­sures to in­crease the val­ue of a mar­ket­ed an­tibi­ot­ic by re­ward­ing drug­mak­ers on­ly af­ter their an­tibi­ot­ic is ap­proved.

Ex­ist­ing in­cen­tives, “while well-in­ten­tioned…ap­pear to have been in­suf­fi­cient, as they fo­cused ex­clu­sive­ly on bol­ster­ing the de­vel­op­ment pipeline with­out re­mov­ing the block­age cre­at­ed by is­sues with pay­ment,” Ver­ma con­ced­ed.

To rem­e­dy the ex­ist­ing set of “mis­aligned in­cen­tives,” the CMS has fi­nal­ized new rules to re­form an­tibi­ot­ic pay­ments from 2020.

Un­der the cur­rent sys­tem, hos­pi­tals bun­dle to­geth­er the costs of all the ser­vices for a giv­en di­ag­no­sis in­to what is called a di­ag­no­sis-re­lat­ed group (DRG). Con­gress im­ple­ment­ed the DRG sys­tem in 1983 to con­trol hos­pi­tal re­im­burse­ments by re­plac­ing ret­ro­spec­tive pay­ments with prospec­tive pay­ments for hos­pi­tal charges. The CMS as­signs each DRG a weight, which in con­junc­tion with hos­pi­tal-spe­cif­ic da­ta, is used to de­ter­mine re­im­burse­ment.

This sys­tem tends to in­cen­tivize hos­pi­tals to pre­scribe cheap­er, gener­ic an­tibi­otics that are not en­gi­neered to tack­le drug-re­sis­tant in­fec­tions. “This, cou­pled with the com­par­a­tive­ly low­er rev­enue ceil­ing for an­tibi­otics due to their low pre­scrip­tion vol­umes, has caused new an­tibi­otics to be­come en­dan­gered in­no­va­tions,” she wrote.

CMS is, there­fore, chang­ing the sever­i­ty lev­el des­ig­na­tion from non-CC to CC for codes spec­i­fy­ing AMR — the “CC” des­ig­na­tion in­di­cates the pres­ence of a com­pli­ca­tion or co­mor­bid­i­ty in a giv­en in­pa­tient case that re­quires the hos­pi­tal to ded­i­cate more re­sources for the care of that pa­tient than typ­i­cal­ly re­quired for the spe­cif­ic di­ag­no­sis. Clas­si­fy­ing drug re­sis­tance in this way will com­pel high­er pay­ments to hos­pi­tals treat­ing pa­tients with AMR, craft­ing a path­way for doc­tors to pre­scribe ap­pro­pri­ate new an­tibi­otics with­out dis­rupt­ing hos­pi­tal bud­gets. CMS will al­so con­tin­ue to “ex­plore whether ad­di­tion­al re­forms are need­ed to re­cal­i­brate DRGs to bet­ter ac­count for the clin­i­cal com­plex­i­ty of drug re­sis­tance,” Ver­ma said.

An­oth­er mea­sure be­ing tak­en by the CMS is to amend the New Tech­nol­o­gy Add-On Pay­ments (NTAPs) sys­tem as it re­lates to AMR, which is “unique­ly di­min­ished for an­tibi­otics.” NTAP was cre­at­ed in 2000 as a “time-lim­it­ed en­hanced pay­ment for new drugs or de­vices” to smooth the en­try for fresh prod­ucts while pro­vid­ing time for the rel­e­vant DRG to re­cal­i­brate to ac­com­mo­date pay­ment for new prod­ucts. “How­ev­er, stake­hold­er feed­back near­ly two decades lat­er sug­gests that im­ple­men­ta­tion of the NTAP through rule­mak­ing by CMS — both in terms of el­i­gi­bil­i­ty cri­te­ria and pay­ment — is in­suf­fi­cient to sup­port in­no­va­tion for an­tibi­otics,” Ver­ma ac­knowl­edged.

This is part­ly due to the fact that an­tibi­ot­ic de­vel­op­ers strug­gle to meet the agency’s “sub­stan­tial clin­i­cal im­prove­ment” cri­te­ria as they are tra­di­tion­al­ly giv­en the green light by the FDA on the ba­sis of tri­als that show their prod­ucts are non-in­fe­ri­or to ex­ist­ing an­tibi­otics. “(H)alf of pre­vi­ous an­tibi­ot­ic ap­pli­ca­tions for NTAPs have been re­ject­ed be­cause of a fail­ure to sat­is­fy this spe­cif­ic cri­te­ri­on,” Ver­ma said.

An­oth­er is­sue is that the pay­ment lev­el for the NTAP is set at 50% of ei­ther the cost of the new prod­uct or the dif­fer­ence be­tween the DRG pay­ment and the to­tal cov­ered cost of the par­tic­u­lar case. How­ev­er, this thresh­old is in­suf­fi­cient to in­cen­tivize hos­pi­tals to file for an NTAP pay­ment due to the low an­tibi­ot­ic pre­scrip­tion vol­umes for re­sis­tant in­fec­tions.

To rem­e­dy these struc­tur­al chal­lenges, the CMS — the Unit­ed States’ largest pay­er — has fi­nal­ized an al­ter­na­tive NTAP path­way that does not in­clude the SCI cri­te­ria and in­creas­es the NTAP from 75% from 50% for new an­tibi­otics that have been grant­ed as Qual­i­fied In­fec­tious Dis­ease Prod­uct (QIDP) sta­tus.

Last year, for­mer FDA com­mis­sion­er Scott Got­tlieb sug­gest­ed a “li­cens­ing mod­el” in which acute care in­sti­tu­tions that pre­scribe an­timi­cro­bial med­i­cines would pay a fixed li­cens­ing fee for ac­cess to these drugs, grant­i­ng them the right to use a cer­tain num­ber of an­nu­al dos­es.

Sarep­ta was stunned by the re­jec­tion of Vyondys 53. Now it's stun­ning every­one with a sur­prise ac­cel­er­at­ed ap­proval

Sarepta has a friend in the FDA after all. Four months after the agency determined that it would be wrong to give Sarepta an accelerated approval for their Duchenne MD drug golodirsen, regulators have executed a stunning about face and offered the biotech a quick green light in any case.

It was the agency that first put out the news late Thursday, announcing that Duchenne MD patients with a mutation amenable to exon 53 skipping will now have their first targeted treatment: Vyondys 53, or golodirsen. Having secured the OK via a dispute resolution mechanism, the biotech said the new drug has been priced on par with their only other marketed drug, Exondys 51 — which for an average patient costs about $300,000 per year, but since pricing is based on weight, that sticker price can even cross $1 million.

Sarepta shares $SRPT surged 23% after-market to $124.

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UP­DAT­ED: Sanofi CEO Hud­son lays out new R&D fo­cus — chop­ping di­a­betes, car­dio and slash­ing $2B-plus costs in sur­gi­cal dis­sec­tion

Earlier on Monday, new Sanofi CEO Paul Hudson baited the hook on his upcoming strategy presentation Tuesday with a tell-tale deal to buy Synthorx for $2.5 billion. That fits squarely with hints that he’s pointing the company to a bigger future in oncology, which also squares with a major industry tilt.

In a big reveal later in the day, though, Hudson offered a slate of stunners on his plans to surgically dissect and reassemble the portfoloio, saying that the company is dropping cardio and diabetes research — which covers two of its biggest franchise arenas. Sanofi missed the boat on developing new diabetes drugs, and now it’s pulling out entirely. As part of the pullback, it’s dropping efpeglenatide, their once-weekly GLP-1 injection for diabetes.

“To be out of cardiovascular and diabetes is not easy for a company like ours with an incredibly proud history,” Hudson said on a call with reporters, according to the Wall Street Journal. “As tough a choice as that is, we’re making that choice.”

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Paul Biondi (File photo)

Paul Biondi's track record at Bris­tol-My­ers cov­ered bil­lions in deals of every shape and size. Here's the com­plete break­down

Paul Biondi was never afraid to bet big during his stint as business development chief at Bristol-Myers Squibb. And while the gambles didn’t all pay out, by any means, his roster of pacts illustrates the broad ambitions the pharma giant has had over the last 5 years — capped by the $74 billion Celgene buyout.

On Thursday, we learned that Biondi had exited the company. And Chris Dokomajilar at DealForma came up with the complete breakdown on every buyout, licensing pact and product purchase Bristol-Myers forged during his tenure in charge of the BD team at one of the busiest companies in biopharma.

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Paul Biondi (File photo)

Bris­tol-My­er­s' strat­e­gy, BD chief Paul Bion­di ex­it­ed the com­pa­ny — just ahead of the $74B Cel­gene deal close

Paul Biondi, who orchestrated billions of dollars in deals for Bristol-Myers Squibb over the 5 years he’s run their business development team, has exited the company. Biondi left last month, according to a company spokesperson, in pursuit of another — unspecified — external opportunity.

After 17 years with Bristol-Myers Squibb, Paul Biondi, Head of Strategy and Business Development, decided to leave the company to pursue an external opportunity. The company wishes him well in his new endeavors. Bristol-Myers Squibb  is actively searching for Paul’s successor, and will make an announcement, as appropriate.

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This image shows a lab technician measuring the zone of inhibition during an antibiotic sensitivity test, 1972. The zone of inhibition is measured and compared to a standard in order to determine if an antibiotic is effective in treating the bacterial infection. (Gilda Jones/CDC via Getty Images)

Bio­phar­ma has aban­doned an­tibi­ot­ic de­vel­op­ment. Here’s why we did, too.

Timing is Everything
When we launched Octagon Therapeutics in late 2017, I was convinced that the time was right for a new antibiotic discovery venture. The company was founded on impressive academic pedigree and the management team had known each other for years. Our first program was based on a compelling approach to targeting central metabolism in the most dangerous bacterial pathogens. We had already shown a high level of efficacy in animal infection models and knew our drug was safe in humans.

Shehnaaz Suli­man dives back in­to Alzheimer's at Alec­tor; Pyx­is re­cruits Spring­Works founder Lara Sul­li­van as CEO

Amid Shehnaaz Suliman’s lengthy resume it could be easy to miss her stint leading early-stage Alzheimer’s R&D at Genentech, where she oversaw a program for the ill-fated crenezumab and initiated one of the first prevention studies around the devastating neurodegenerative disease. But it is this experience that she — after thinking long and hard about her next career move over the past months — will be leaning heavily on as the first president and COO of Alector.

PhII fail­ure in rare neu­rode­gen­er­a­tive dis­ease? No mat­ter, Bio­gen will mo­tor on in Alzheimer's

Biogen’s fierce focus on disorders of the brain has hit another roadblock.

On Friday, the US drugmaker — which recently resurrected its amyloid-targeting Alzheimer’s drug, aducanumab — said its anti-tau drug, gosuranemab, failed a mid-stage study in patients with progressive supranuclear palsy (PSP), a rare brain disorder that results from deterioration of brain cells that control movement and thought.

A USP­TO le­gal ad­vis­er is off con­tro­ver­sial Gilead HIV case af­ter ac­tivists al­lege tweets show bias

Last week, a top legal adviser in the US Patent and Trademark Office working on the high-profile Gilead HIV PrEP case tweeted at Sen Bernie Sanders (I-VT) “What proof????” and then at activists “Do facts even matter to you?”

Now, STAT reports, she’s off of the case.

Activists in the coalition PrEP4All filed a petition to the USPTO on December 9 asking longtime senior legal advisor Mary Till be removed from the Gilead case, saying her tweets showed a bias toward Gilead. PrEP4All requested earlier this month the agency reject Gilead’s three-year patent extension for TAF (tenofovir alafenamide), a component of one of the HIV prevention regimens often referred to as PrEP. They allege the pharma giant delayed developing the drug in order to “game” the system and hold off generics.

What's next for Sarep­ta? A third DMD ap­proval, an­a­lysts pre­dict

What Sarepta wants, Sarepta usually gets.

In dramatic fashion on Thursday, the approval of Vyondys 53 — to treat a subset of Duchenne muscular dystrophy (DMD) patients — was unveiled, four months after the FDA’s initial rejection. With two drugs now approved on the basis of ~1% expression of dystrophin — the missing protein that causes DMD — Sarepta is in a prime position to take its third DMD drug to the regulator, analysts said, predicting healthier odds of success.

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